Stocks edge up after GDP growth revised higher

NEW YORK - Major stock indexes edged up to two-year highs Wednesday after a report showed that the U.S. economy grew faster than previously thought over the summer.

The Commerce Department said the country's gross domestic product rose at an annual rate of 2.6 percent between July and September, a small increase from its earlier estimate of 2.5 percent.

"Some folks will look at 2.6 percent as a disappointment, but the market is taking a look at the bigger picture," said Phil Orlando, the chief stock market strategist at Federated Investors. Many traders expect the economy to grow at a pace of 3 percent or more during the fourth quarter and through 2011, he said.

Separately, the National Association of Realtors said sales of previously occupied homes rose 5.6 percent in November to an annual rate of 4.68 million. That was slightly below analysts' estimates of 4.75 million, according to data provided by FactSet.

"The home-sales numbers are significantly off the highs that we saw in the go-go years earlier this decade, but 5 million home sales a year is good enough to keep prices from falling," said Paul Zemsky, the head of asset allocation at ING Investment Management.

The Dow Jones industrial average rose 26.33 points, or 0.23 percent, to close at 11,559.49. The S&P 500 index rose 4.24, or 0.34 percent, to 1,258.84. Both indexes closed at their highest levels since July 2008.

The Nasdaq composite index gained 3.87, or 0.15 percent, to 2,671.48. It was the highest close for the Nasdaq since Dec. 28, 2007.

Trading was light ahead of the Christmas holiday on Friday. Rising stocks outnumbered falling ones 3-2 on the New York Stock Exchange. Consolidated volume was 3.6 billion shares.

Of the 30 stocks that make up the Dow index, 22 rose. Shares of Bank of America Corp. led the way, gaining 3.08 percent to $13.38. Hewlett Packard shares had the largest fall, dropping 1.03 percent to $41.48.

Before the market opened, Walgreen Co. reported revenue and earnings that beat analyst estimates. The country's largest drugstore chain said its income rose 18.8 percent. The stock rose 5.48 percent to $38.85.

Late Tuesday, Nike Inc. said it planned to raise some of its prices because of higher costs for cotton and shipping. Revenue and earnings per share were better than analysts had forecast. Nike shares fell 5.80 percent to $86.95.

December is shaping up to be a good month for stocks. The S&P 500 has risen 6.6 percent this month, and the Dow has gained 5 percent. On Tuesday, the S&P 500 closed above the level it reached on Sept. 12, 2008, the last trading day before the collapse of Lehman Bros. Holdings Inc. at the height of the financial crisis.

Bond prices fell slightly. The yield on the 10-year Treasury note rose to 3.35 from 3.30 late Tuesday.

For the week, the Dow was up 67.58, or 0.6 percent; the S&P was up 14.93, or 1.2 percent, and the Nasdaq was up 28.51, or 1.1 percent.

For the year, the Dow was up 1,131.44, or 10.9 percent; the S&P was up 143.74, or 12.9 percent, and the Nasdaq was up 402.33, or 17.7 percent.